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Mad Money

News/Business. (2012)

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01:00:00

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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528

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480

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Stratasys 14, Cramer 8, Washington 8, Ho 8, Apple 7, Florida 6, Jim 6, New York 5, Tamiflu 4, China 4, Us 4, Sherwin Williams 3, Kieran 3, Doreen 3, Oracle 3, Lisa 3, Pfizer 3, Honeywell 3, Walgreen 3, Alabama 3,
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  CNBC    Mad Money    News/Business.  (2012)  

    December 14, 2012
    11:00 - 11:59pm EST  

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>> you need to get in the game. >> firms are going to go out of business, and he's nuts! they're nuts! they know nothing! >> i always like to say there's a bull market somewhere, and i promise -- >> "mad money." you can't afford to miss it. >> hey, i'm cramer. and before we begin tonight, i want to express our thoughts and prayers that everyone affected by this terrible tragedy in newtown, connecticut.
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our words can do little to ease your pain. but you know this. we are with you in this incredible difficult time. and recognize that you are who we are thinking about, even as we try to focus on our work today. so as for the markets, it was another weak day. dow dipped 36 points. s&p gave up .41%. nasdaq declined .70. a lot of that again because of apple. you know the drill as we head into the weekend. i'm not expecting to hear any progress on the fiscal cliff. but you know, i always watch the sunday morning talk shows now very closely and i'm looking for some politicians saying something encouraging. what does encouraging mean? it means a republican uttering the two words tax increase without the word no before it. and the democrats uttering two words, spending cuts, without the word no before them. neither seems to be able to pull off that syntax, though. at this point i think we've got to assume that the washington people, they can't get it together. we've got to gird ourselves for a cliff, make sure that we understand what the dive will look like, and focus on things that are easier to gauge, namely earnings and remembering that if
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you get aggressive ahead of falling off the cliff you're just going to do poorly. so with that in mind here's your game plan for next week. kicking things off is general electric. okay? i think this is really important. why? because this is the most important talk about the whole -- give you the whole panoply here. and my charitable trust owns ge, and part of that is because we believe it's a terrific play on several huge international themes. energy, conversation, natural gas use, aerospace, health care for worldwide aging population. i expect ge to be very upbeat. i think jeff immelt's going to tell a good story. some of that's because the company just boosted its dividend by 12% today p. you don't do that if you're doing poorly. the meeting will be the most talked about event of the day, maybe even the week other than the fiscal cliff. next up, oracle reports on tuesday after the close. i normally like oracle going to earnings.
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i heard so many rumblings of a better than expected quarter that it makes me nervous given the stock rallied some 25% on the year. the quarter's got to be lights out or we can see beatdown. wednesday morning we get a result from the exact opposite of oracle's general mills. nothing like -- this one just kind of goes up a little bit each quarter, delivers superior returns over a long period of time. and allows you to sleep at night. general mills hasn't done anything of late. but do you pocket that fine dividend, hold on, leisurely ride. stephanie link and i were talking about the stock last night. she's the co-director of actionalertsplus.com, my charitable trust. it's just worth owning it because it just doesn't ever get hammered. after the close we hear from accenture, which may be along with ibm the best consulting company on earth. if i had to buy one stock for a
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trade next week -- you know i don't give you many trade ideas. i have to admit that i would buy accenture on tuesday ahead of the report. because this company has consistently guided up when it reports a terrific quarter. i don't think this week's going to be any different. complicated one. bed bath & beyond. bbby. they report wednesday. i am worried about bed bath. and this happens to be a stock i just mentioned stephanie link. this is a stock that we own for the charitable trust. small position. why not bigger? the stock acts so horribly. even on good days. that's often a tell for the future. it's true. this one's already down a ton. you might ask, how much worse could it get? my answer to that would be take a look at dollar general. i thought that one had bottomed after a hideous sell-off, and i was wrong. because the company had gross margin pressure. making less on every dollar that was sold. the same thing that may be happening with bed bath. maybe that's why it doesn't lift. but the company's so darn cheap, you can't jut cut and run. it's got a great balance sheet, and it really should if possible be taken private. that would be a gigantic deal. not only that, though, but the stock is gripped with one of the worst charts imaginable.
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i'm not a chartist but i point it out. everything has a price. and this one doesn't seem to be there yet. but i think it could be there shortly. then there's paychecks. we know this one, right? we endlessly hear about people in washington wanting to do the right thing by the small businessperson. of course what they really should do if they want to dot right thing is get the heck out of the way, right? our businesspeople know how to do business without the government getting involved. i think these guys in washington are killing confidence. i'm going to ask paychecks directly how much of this fiscal cliff thing is crimping what's been a terrible time for small business anyway. let's listen to what paychecks has to say. the actual stock is paying away for a return even as the government is prolonging the pain. thursday we hear from car max. we know cars are in scarce supply in the northeast, and carmax is the leading supplier of used cars. plus the used car market is poised to really pick up steam. the use the car business does well when there are a lot of new cars on the road. so the recovery in the domestic auto biz in the last couple years is now filtering down to
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carmax, which makes more money from selling relatively new used cars. i think we're going to hear very good things, particularly in light of hurricane sandy. darden gives us results. it's on thursday. the bar's been set very low here. but not lower than the company itself. and as far as i'm concerned, maybe it's time to think about a new transitional management team at darden if they fail to get it together soon. almost every other restaurant chain in this period has been having a good run, while the parent of olive garden and red lobster has been endlessly disappointing. and the recent preannouncement tells me not to expect any imminent changes. amazingly bad same-store sales. periodic blip up, sucks people in, and then more bad same-store sales. a couple more disappointments and people will start worrying about that bountiful dividend which currently gives you a 3.4% yield. that will be the ultimate red flag. we also get results from discover financial. the credit card company's been the cheapest of the big three. mastercard. my charitable trust owns nap and visa. discover's been consistently beating expectations of late, which is why it is up 65% for
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the year. all that said, believe it or not, the stock might have a lot more room to run because even after that move it just isn't expensive. it sells at eight times earnings. visa and mastercard, faster growers, 20 and 21 times earnings. discover isn't that different from the others. it can't be that much worse, so to speak. i would buy it on any fiscal cliff weakness and i've intended several times to buy it for my charitable trust. here's a tough one. after the close thursday it's swoosh. nike reports. few stocks have become more controversial than this one. here's a company that was doing fabulously in china and making up for all sorts of north american weakness. that had been the theme for a couple of years. now it's just the opposite. people are concerned about the inventory building in china putting a lid on the stock. now, i am looking for a lid to be blown off by a turn in china eventual l. maybe not this quarter. while the u.s., i think, is strong because of foot locker,
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but some analyst came out today and said u.s. is even weak. remember, nike trades on futures orders, not on earnings. so if you're dumb enough to want to trade in after hours, be aware, you might be trading on the wrong number. friday. these are big brand names. what a big week next week. friday we get results from walgreen's. i feel badly for wag. we just heard from cvs yesterday which boosted its numbers. that's a tough comparison to go against. i don't know how walgreen's can keep up. i will say this, though, the drug stores have been in secular share take mode from other stores, which is one reason why cvs was able to deliver such a strong number p. and i think walgreen's will show better numbers now that it's put its express scripts tiff behind it. moving over to cvs. that was really he helpful for cvs. there is only one issue to get my arms around here, the gigantic purchase of alliance boots. and whether walgreen's is swallowing more than it can chew. be ready for the heimlich. the newly design the walgreen's and dwayne reed's in new york are things of beauty and among my favorite places to shop and those who watch "squawk on the
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street" know i like to shop. i go to my dwayne reed's twice a week and the store manager tom does a great job. my inclination is this is a buy on any weakness and if it weren't for the gigantic acquisition i would say don't wait for the weakness. it's got a bright future ahead of it. beyond earnings monday the empire state manufacturing report from new york. in full-blown weak data mode want to see if business is rolling over. so the empire manufacturing number will set the tone for the rest of the day for things that ge doesn't cover. the fed told us businesses are ratcheting down spending. this is what we could hear. here's the bottom line. it's time to get used to the idea that we're going over the fiscal cliff. ready yourself to take a big hit in a couple weeks. but don't forget that individual companies still matter. if you really like one of these companies, i'm going to suggest buy half and then wait to see if we go over the cliff and buy the rest. let's go to terry in maryland. terry. >> caller: hey, jim, i'd like to
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wish a great big chess 35ek bay boo-yah from baltimore. >> boo-yah from the shores of chesapeake bay. what's up? >> caller: i'm a long-term investor and really like the stock sherwin williams and i was just wondering what your thoughts are about how this latest acquisition by ppg is going to affect the stock. >> that was a great acquisition by ppg. the acquisition of paints. but sherwin williams makes good acquisitions of its own and i think sherwin williams is an absolutely terrific stock and i would not want to sell it particularly because i think the housing story is so strong that even if it gets knocked down by the fiscal cliff it will come back again. lisa in missouri. lisa. >> caller: hi, mr. cramer. first i want to thank you for helping me to get in the game. >> oh, thank you, lisa. what's up? >> caller: i was wondering what you think about pfizer's $4 billion ipo launch of its animal health care unit. >> i will tell you i'm excited about it. i have warmed up to pfizer. close viewers of this show know i'm not really into the big, big pharma names because they don't have the growth that develop gene has or the growth that gilead has. but pfizer's fine and if you own
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it i endorse it. i think it goes higher. i want to go to mark in new york, please. mark. >> caller: boo-yah. how are you? >> real good. >> caller: my question is two related companies. first solar since september is going up 50%. second question concerning recent ipo solar -- do you -- >> wait. on -- solar city and first solar. okay. very different companies. first solar's a panel company. price of panels come down. first solar we said we were too negative in the teens, we got a little more upbeat in the 20s. i don't really care for it in the 30s. solar city, we get a pullback in some cities for solar you're going to wish you -- >> sell sell sell. >> so i can't recommend it. i think we should get used to the idea of the fiscal cliff and be prepared. we've got a series of good companies reporting next week. if you really like them, understand you can buy some of
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them because there are great stories out there. but the fiscal cliff looms on even the best. "mad money" will be right back. coming up, another dimension? it's one of the most talked about new trends. and tonight cramer's taking a hard look at 3-d printing. it's a face-off of the industry's two top stocks. and jim's finding out which one could turn into your personal printing press. and later -- rotten apple? the crown jewel of tech has fallen like a rock. over 150 points in the past three months. but has the glow around the beloved electronics maker faded forever, or is now the time to take a bite? get cramer's take. plus, beating the buzz. >> the fiscal cliff, of course, is a complete made-up -- >> the drone of d.c. is deafening as politicians posture ahead of the fiscal cliff. but don't let washington worries keep you out of the game. cramer's got a spec play that could connect you to solid returns. get the 411 just ahead.
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all coming up on "mad money." don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer. #madtweets. send jim an e-mail to madmoney@cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. [ sniffs ] i have a cold. [ sniffs ] i took dayquil but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ breathes deeply ] awesome. [ male announcer ] yes, it is. that's the cold truth!
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lately i've been getting a ton of calls about the printing business. no, i'm not talking about old-fashioned printers like the kind you buy from a dinosaur like hewlett-packard. i mean three-dimensional printers. these are machines that can rapidly design and produce functional three-dimensional parts and products. designers use them to whip up prototypes right in their offices instead of having to send out blueprints to an actual manufacturer. increasingly we're seeing them in strange places. dentist's office to make molds and bridges. and now i'm getting a lot of questions. is 3-d printing for real? and if so, what's the best way to play it? because "mad money" is the most
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interactive show on television i'm going to answer that question right here, right now. first of all, yes, 3-d printing, it is not some sort of flash in the pan. it's not a fad. it's a real thing, and it's in bull market mode. it's here to stay. i bet in a decade as these devices become cheaper we'll start seeing them all over the place. and the 3-d printing space has been on fire this year. it's basically a foot race between two key players -- 3-d systems, symbol ddd. and stratasys. symbol ssys. we get a ton of calls on both. tonight i'm going to weigh them against each other and get a final verdict. 3-d systems, which is probably the one you call about the most, has rallied a whopping 218% since the beginning of the year. pretty amazing. stratasys is up also, not chicken feed. at this point i think both companies can do well. but as far as the stocks go i'd go for stratasys.
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although given the share price has more than doubled year to date it would behoove you to wait for a pullback. i expect a big marketwide sell-off when it can becomes clear we're definitely going over the fiscal cliff in a couple weeks. that's your chance. why is stratasys the best way to play the 33d printing business? stratasys has a terrific catalyst. it closed on its merger with objet. which is another 3-d printing play. more specifically objet has the leading technology the best margins and fastest growth in the industry with a pristine balance sheet. with this stratasys gets access to a broader customer base and objet's technology. which is complimentary rather than cannibalizing their existing businesses. these companies operate tw n. two different areas. stratasys sells big printers that can make objects out of very stud sturdy materials as well as desktop printers.
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objet is all about printing products with incredibly final details. i found this stuff fascinating. another reason why people call about these stocks, these companies are fascinating. objet uses inkjet technology to spray photosensitive polymers and then hits them with uv lights to harden the materials. they do it layer upon layer upon layer. so you have the full 3-d product. and objet can produce layers which are as thin as 16 microns, which is just 0.0006 inches. and that's how they get the ultra fine detail. that's why the 3-d printers are great for making pristine prototypes for all sorts of different companies. i wish i had one of these when i was growing up. and thanks to the merger it belongs to stratasys. if you can't beat them you've got to join them. actually you've got to buy them. they're even co-opting objet's management. the old stratasys was one 3-d printing company among many. the new stratasys post-objet
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merger is a powerhouse. printers can cost anywhere from $19,000 to $600,000. competition's much greater at the lower end of the spectrum. the terrific thing about the merger is it gives strata sys more exposure to the high end. there's a ton of interest in the objet 1,000. that's a 3-d printer that's priced at $600,000. it costs 40 grand just to load the machine with materials. now that it owns this baby it should give a big boost to the growth rate as well as margins. that said these are not cheap stocks. stratasys sells for 37 times next year's earnings. 20% long-term growth rate. on the other hand i think the estimates will be conservative and post objet more realistic evaluation of 33 times earnings. still price by but definitely in the area of what growth opted managers will pay for a growth stock with momentum that is obviously let's just say as it comes down in price will be sold in many more places. 3d systems the other
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three-dimensional printing play is no slouch, but the company doesn't have any merger catalyst like stratasys, low margins, stock's expensive. 3d trades at 29.5 times earnings. remember our rules. the price to earnings multiple in this particular case is more than twice the size of the growth rate and when a stock is that richly valued my rule of thumb is no matter how good it is we have to stay away until it gets a heck of a lot cheaper and half the time it gets a heck of a lot cheaper because the fundamentals have fallen apart. don't get me wrong. 3d systems seems like a terrific company. a lot of short sellers in the name who've questioned the growth. revenues rose 57%. double-digit revenues are a big deal in this market. 57% year over year, organic growth of 26%. i believe in the business. i just think the stock's too expensive right now. i think you've got a better opportunity with stratasys which
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is not only cheaper but has positives from the objet merger. here's the bottom line. the 3-d printing stocks have been on a major tear. i think this business is he very much for real. it is not an fitp, which is flash in the pan. and stratasys is the way to play it. you've got to wait for pullback when you buy these growth stocks before you start buying. and please if you're really excited about it study this weekend. use limit orders on monday. let's go it chris. wow. in the bakken. chris in north dakota. what's up, chris? >> caller: boo-yah, jim. >> boo-yah, chris. >> caller: i need your help. stock lexmark. ticker lxk. wondering if it's time to take profits on that one. with the fiscal cliff come g are -- >> i don't know a soul that has profits in this thing. >> sell sell sell. >> this is what i call a declining secular story. i don't want you anywhere near lexmark. i want to go to doreen in florida, please. >> caller: that's me. mr. boo-yah? >> yes. mr. boo-yah himself. dr. boo-yah.
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>> caller: good luck, dear. this is doreen. >> thank you. >> caller: i would like to know about your intel. i heard some rumors about it. and you gave me that stock ten years ago, and i did very well. >> ten years ago the pc was in its ascendance. now the pc is in secular decline, and that makes it so intel's a very tough one to own. i am not going to tell you to buy it. as it is, even the semiconductor companies that are doing very well are going down. i'm be venturing into the intel, which indeed was, doreen, as doreen correctly remembers, my favorite stock. let's go to john in massachusetts. john. >> caller: big boo-yah, jim, from massachusetts. >> thunder way. >> caller: my stock is amat, applied materials. i understand it's going to be expanding to asia. should i buy -- >> it's already over there. i've got amat horweem who's one of my closest friends writes for me at the street. he thinks the stock could make a comeback. it's got a good yield. i don't care right now for
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technology because even the good technology's going down. so i say we take a pause, look for the ones that get hit that have the highest growth. amat isn't one of them. looking for something to make your portfolio pop? i think 3-d printing stocks, you told me to look into them. i dp. did. they're here to stay. i say stratasys is the better way to play the 3-d names. after the break i'll try to make you some more money. >> announcer: coming up, rotten apple? the crown jewel of tech has fallen like a rock. over 150 points in the past three months. but has the glow around the gloved electronics maker fade faded forever, or is now the time to take a bite? get cramer's take. ♪
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prescription tamiflu attacks the flu virus at its source. so don't wait. call your doctor right away. tamiflu is prescription medicine for treating the flu in adults and children one year and older whose flu symptoms started within the last two days. before taking tamiflu tell your doctor if you're pregnant, nursing. have serious health conditions, or take other medicines. if you develop an allergic reaction, a severe rash, or signs of unusual behavior, stop taking tamiflu and call your doctor immediately. children and adolescents in particular may be at an increased risk of seizures, confusion or abnormal behavior. the most common side effects are mild to moderate nausea and vomiting. the flu comes on fast, so ask your doctor about tamiflu. prescription for flu. progressive direct and other car insurance companies? yes. but you're progressive, and they're them. yes. but they're here. yes. are you...? there? yes. no. are you them? i'm me. but those rates are for... them. so them are here. yes!
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you want to run through it again? no, i'm good. you got it? yes. rates for us and them -- now that's progressive. call or click today. are we too obsessed with certain stocks? our fancy, that captivate us and are so important to the stock market psychologically that they blind us to all the others, including far less risky opportunities which we would normally like to focus on? i think about this a lot because i spend a gigantic amount of time researching companies that don't tug at our heartstrings and aren't household names, stocks like an eaton or ppg or briggs and stratton or say a honeywell because i think they represent good value at reasonable prices that are not sexy stocks.
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i don't care about that. they aren't consumer plays. that doesn't bother me. although you might at some point in your deadly travels see a cutler hammer fuse box made by an eaton, honeywell thermostat, or a briggs and stratton engine of some sort pf lawnmower, portable generator, snow thrower. ppg just spent a billion dollars to buy akzo household paint today. and like so many other moves that ceo chuck bunch makes you caught a five-point gain on top of an already amazing run. i like these mundane ideas that represent superior companies that do so many things to make themselves valuable and are always finding ways to make the top and bottom lines more lucrative. i bet most of you don't care about ppg but that company has a fabulous return this year simply by contributing its march toward becoming a proprietary and less commodity company. many of these stories have a very similar theme to them. but i know that for every one
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person that wants to learn about ppg out there are probably 100 people who want information, any information and a viewpoint on how a well-known company like apple is doing at this very moment. so with that preamble of what i think you should be looking for out of the way, let me give you what so many people really want. a rundown of what i think's happening with the most asked about stocks. the ones that come up every time the market gets mentioned in any conversation anywhere. like for instance last night. when i was at the aarp concert -- i mean when i was at the rolling stones concert i was working my way to my seats and i was asked not once but twice about what to do with apple. you get these questions all the time when you hang out with me. you get them all the time when you're in my size 9 wingtips, also known as my shoes, typically when the stocks are losing. not only when they're winning. and apple stock down 20 points today another heavy volume. the guy next to me at the will call window says hey. hay hey. they always start with the hey. hey, what's the matter with apple?
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well, i play his game. i say it's going down. that's what's the matter. helpful. but i put it like that because stocks can acquire an overtone that actually determines the facts, so to speak. and apple stock's one that's swirling in that particularly toxic soup. as fabulous as the run up was this sickening decline from 700 to 500 has a fascination of its own. here it goes. i think there's a host of reasons why apple's going down, not just one. the first is an embarrassment of riches when capital gains taxes are going up. it makes sense to lock in the gains now rather than later. come on. you're going to pay much higher taxes next year. when a stock gets sold down like this there's always a kernel of truth of why it might be tanking. a fundamental truth. we heard that apple's cutting back its ordering of parts for the iphone and ipad. wow. that makes people feel there could be an inventory glut developing which means prices are going to come down and gross margins growing to shrink. the iphone's not selling well in china. something i heard today.
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we heard they don't have the same carrier sponsors. samsung is loved over there. that means numbers may come down again. why not take them down, do it simultaneously with taking the price target down, particularly one that's become an absurdity in the high 700s. that's exactly what one analyst did today, cut the price target and the numbers, which were too high. and that frightened people. my take on apple, i am not dogmatic, people, but i'll give you my story. my charitable trust owned it for a long time. one of our longest held positions. we did some selling about 90 points ago. why? because the stock had gone up so much that we had become the apple fund. so we took some profits. i confess to also being worried that the company lacks any new omg products and that could dim the company's long-term prospects. but we're holding on to the rest of our position in the trust because i think apple's a good investment that's inexpensive, even after the analyst numbers we got today. can't trade it, though, way too hard. google.
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i was on google before i came out, on it maybe a dozen times a day, maybe more. this is a company that's in our faces. because we all use google. it has rallied big lately because google maps is back on the iphone. if you go to your google page today you see right underneath the heading, listen, we're back on apple imaps. you think that's good. google's most recent quarter was terribly disappointing. and even though it's trendy and has a good number of long-term ideas that disappointment is still with me. i would be scaling out of google, especially because i see no end to the decline in advertising margins. now, how about this research in motion? i do not own a blackberry. i own an iphone. but this blackberry, there's a new one coming out, new iteration. and it remains endlessly fascinating to its users. i think rimm has taken out a lot of cost. the company's cash flow positive. the stock's had a gigantic run. that actually worries me. it's still down a good deal from its high. but rimm is more a sell than a hold for me. because the new device, let's
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say it gaits negative welcome a la the microsoft surface. well, you're going to lose money quickly. i would take money off the table. how about this netflix? this one's got a quality like research in motion. a gigantic client base. i believe those 27 million-odd subscribers are worth something to someone. netflix is a little like rimm. but it's vaulted here. and i believe the company would like to raise some capital given the hefty price tag on its recent deal with disney. i sense the shorts are panicking and that's causing the spurt higher. i don't want to be part of that short-long obsession. speaking of obsession, amazon. while it is holiday season, people shop on amazon. i was on amazon this afternoon. well, i was working on the show, too. this company's spending and laying the groundwork so they can become the most convenient, lowest priced department store in the world. a virtual one. that matters. i think amazon goes higher. then there's the endless fascination two retailers. jcpenney because of the attempt to turn the company around by
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ron johnson, the guy who created the apple store, and best buy because its founder seems hellbent on taking the company private. penney was on the ropes until recently when we learned from manny tirico, right here, the terrific ceo of pvh, phillips venue and izod, you know all those great brands, tommy, calvin klein, that penney's has started to order a ton of merchandise from pvh for its store within a store. in fact, his comments marked the bottom in the stock. as i pointed out at the time, i shopped jcpenney on tuesday and it was actually quite nice. i had lost this really good hat. if anyone knows my hat, please give it back to me. i went to buy it and they were all out of them. at $21 jcpenney can go higher even without additional news. best buy, i think the fundamentals here are on the decline. it feels terminal to me. so it seems a little ridiculous to own the stock. just as i think it's a little ridiculous that schultz, the founder, can get the financing to make the takeover that he so
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desperately seems to want to do. let me close by saying i totally understand the predilection if not the obsession with these names. i get that. but here's the bottom line. these obsessed-upon stocks have become total battlegrounds, people, and i get no pleasure from stepping on the battlefield, which is why i like the mundane plays. not as much reward. but certainly a lot less risk. don't move. "lightning round's" coming up next. [ male announcer ] citi turns 200 this year. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you?
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it is time. it's time for the "lightning round" on cramer's "mad money." that's where i take your calls rapid-fire. you say the name of the stock i tell you whether to buy buy buy or sell sell sell. i do not know the callers ahead of time. my staff prepares the graphics on the fly. play until we hear this sound. [ buzzer ] and then the "lightning round" is over. are you ready, skee-daddy? it's time for the "lightning round" orrin cramer's "mad money." dan. >> caller: i own 1,000 shares of facebook. i bought them at 23. do i sell or do you still -- >> no, i think you hold on to it. look, there was a lockup expiration. the stock had been on a real horse. it's come down a little. i like the stock.
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i liked it in the early 20s. i like it at that last lockup. i think you're fine with facebook. let's go to robin in new york. robin. >> caller: hey, jim. a foxy and festive boo-yah from new york. >> sweet. >> caller: i'm known as the natural queen. and i'm calling about -- it's near its high. it has competition from larger companies for export licenses. where do you stand on -- >> i think you should ring the register. i'd rather have you in cheniere energy partners, cqp, which does give you a yield, and take the nice gain. it's a terrific job you that brought that cheniere when you should. i like cheniere energy partners lp right now. let's go to kieran in florida right now. kieran. >> caller: kieran in florida. my tom is con ed. i've been buying if for the live five years. is it time tyke profit or --
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>> no, con ed's fine. i'm telling people to buy it. it's like a pro fiscal cliff stock. john. >> caller: john k. in florida. jim, i'd like to say merry christmas to you and yours. >> thank you. same to you. >> caller: my stock is fortress investor group. f.i.g. >> i prefer kkr financial. and i also prefer blackstone. i think they're better bets with better run management doing better things. it's done very well for us. let's go to shane in georgia. shane. >> caller: jim, hi. good to talk with you. semper fi boo-yah. >> yes. thank you for serving boo-yah. how can i help? >> caller: sirius xm radio is my stock. >> i think it's kind of topped out here because i like mel karmazin. and mel karmazin is going to be leaving. so 3 and change is about all i think you're going to get out of sirius. because, well, what can i tell you? i love mel and mel's stepping out.
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and that, ladies and gentlemen, is the conclusion of the "lightning round"! >> announcer: coming up -- beating the buzz. >> the fiscal cliff is a complete made up deadline. >> the drone out of d.c. is deafening. as politicians posture head of the fiscal cliff. but don't let washington worries keep you out of the game. cramer's got a spec play that could connect you to solid returns. get the 411, next. i have to admit the need to plan
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it means you're up more likely to get blown out, to just sell everything and walk away from the table, be very discouraged and yet this is a long-term wealth creation situation. that's what the stock market is. but if you can't win, you can't win if you don't play. which is why in times like these i'm actually an advocate of reasoned and intelligent speculation. only person i hear denigrated all day. you need something to keep the game interesting though. you need something to hold your attention. and that's when investing in some higher risk, high reward stocks is all about. remember, i allow one speculative position in a ten-stock portfolio. so tonight for speculation friday i want to draw your attention to a super risky stock that has the potential to rack up major gains. this one is not for the faint of heart but it's definitely exciting, exciting enough to keep from you losing interest in the stock market big-time. and i'm talking about virnetx. vhc for all you home gamers. it doesn't make anything, it doesn't sell anything. it belongs to a cool class of companies known as non-practicing entities, which
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makes it sound like it doesn't do anything at all. but virnetx does own something. it owns intellectual properties i.p. it has a host of patents that enables secure communications over the internet. everything from video chat like might see on skype or apple's face-time. voice over internet protocol phones. the interactive video conferencing business. the patents were originally created at standards applications international. saic. you may know it. a defense company that subsequently spun this office virnetx. and these patents are essential to the patents behind 4g wireless connectivity. paydirt. it makes its money by either licensing its patents to technology companies or by litigating, suing other companies for patent infringement. that may not sown like much of a business model, but wait a second. remember, in the world of technology intellectual property is everything. that's why non-performing entities like virnetx have outperformed in the last five areas.
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it's been one of the best performing stocks since "mad money" went on the air. it is up a staggering 15,000% since march 2005. who said you can't make money in stocks? that's when the show got going. very few people had heard of virnetx until 2010 when the company took microsoft to court and won a $200 million lump sum. since then virnetx has been on a roll litigating and signing licensing deals left and right. this year it signed with aastra, mitel and n.e.c. both these deals contained an up-front component and more importantly a royalty payment for all future sales of products that contain virnetx's property. now virnetx is going after apple in federal court. on february 6th a federal jury ruled in favor of virnetx and ordered apple to pay them 368 smackers for past infringement. next week we're going to get verdict from a judge that could increase or decrease the damage and also details on the payment for apple.
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this post-trial judgment's important because virnetx has litigation's in works against apple. it filed a new lawsuit against apple for willful patent infringement on a public of products including the iphone 5. the itouch. the last ipad, the ipad mini. ordinarily it's very difficult to bet on litigation. it's like betting on, some people would say, not me, betting on a coin toss. but given they just won a case against apple based on these same patents i think it's more likely they will once again prevail. and win cog mean virnetx gets not just a lump sum but a royalty in these super apple products and that would be a potential windfall. that's not the only thing virnetx has going for it either. in march it's scheduled to go to try against cisco, avaya, and siemens. ordinarily i wouldn't bet on this thing but it's racked up an impressive track record in litigation against big players.
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so i think the smart money is on them winning. however, this is obviously a very risky play. if virnetx loses it could be crushed. this is reasoned gambling. there's nothing wrong with a little reasoned gambling in portfolios. it's not a curse word. remember, one out of every ten. i need you to stay involved. but you need to do everything you can to cut down your down side. if you want to play it i don't know if common stock's the right thing to do. what i prefer you to do is use deep in the money call options. stock replacement. it's a strategy i outline in getting back to even that gives you more bang for your buck in terms of capturing the up side but limiting your dollar amount of exposure or your down side. with virnetx i suggest buying the june 26 call options for 12 bucks. 36 plus 12. or 4 1/2 bucks about above where it is now. these options give you enough time to get a court decision.
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if virnetx wins stock's going a lot higher than 38 and if you lose you're not going to go to zero or anything like that because of the possibility of an appeal. that's going to maintain some wealth. but this way you don't take the risk of a total loss that sends the stock below, say, 20 bucks. alternatively, if you knew we were going to get a verdict by the 30th of march you could always buy the march 30 calls for -- with much res capital risk but you'd be putting less money to work, that's good, but there would be more time risk and that's bad. because the options expire third week of march and then there's zilch if nothing happens. a little in the money stuff right now. but speculators always have to calculate these risks. if you wanted to you could sell some more 40 call options for $3 against the june 26 call's calendar spread betting if nothing happens in the march time frame you'd be able to lower the cost of your call options by those three points which will have gone out worthless. you could do that for some of your position. think of it as getting a dividend on your calls making it so you don't have as much capital at risk. here's the bottom line. i think virnetx is a pretty intriguing speculative stock
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with a potentially really bright future. but because that future's dependent on litigation we have to accept the risk. that's why i think you should play it with deep in the money call options, ideally the june 26th, 2013 calls for 12 bucks, which gives virnetx enough time perhaps to prevail knits case against apple. "mad money's" back after the break. ♪ ♪ [ male announcer ] they are a glowing example of what it means to be the best. and at this special time of year,
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it hit me last night, what makes these budget talks between boehner and obama so darn annoying? i don't think he understand,
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neither man, the consequences of what they're doing right now for the american business publicly with all the wrangling. that's because in many ways the business public is not represented by either the speaker or the president. as opposed to the democratic and republican posturings i hear two streams of thought. for the gop they worry about the small business person and how much it's being hurt by government tax policies. for democrats it's the folks who work at places that aren't helped enough by government programs and pay more than their fair share of taxes. that's what makes this whole thing so unrealistic. for small businesses revolve around bigger businesses. when you set up a small business unless it is approximate making a better mouse trap, what you typically need is traffic. that traffic comes from the growth of big business in the area. you want to create a service or hospitality business you need someone to cater to. you aren't worried about taxes. you're worried about customers. but who in washington is worried about the customers? have they ever had any customers? who's concerned that their psyche might be damaged by the mess the government's making who's fretting about the customers transacting with the small business people and those they employ?
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it's not even part of the conversation, the customer. not part of the conversation. in washington nothing's more important to business than the customer. how do i know this? serial entrepreneur, my friends. i recognize the customer is the true lifeblood of why you're successful or not. if you're fretting about tax rates, you're going to fail. if you think a tax rate is the reason to start a business or not you shouldn't be running aw business. stick to your day job. of course the president's focus is equally myopic. he should go spend time with the fed chief. that guy's got a really good idea of how people should be put to work. they get jobs when demand is stimulated. you get demand when you have a much larger employer set up near. you otherwise, no one comes by your place. you don't get any customers. so all the existing businesses do is try to figure out how few people they can hire. particularly because now they know they have expensive and extensive health care costs that weren't even part of the equation maybe when they started the business. what bugs me is you can only not
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know these things if you've never been hired or fired or create a job in the private sector or been a salesperson. i've been all these things. in other words, only a politician could be ignorant about this stuff. now, there's another side of all this. if we're concerned our government might one day not be able to pay its bills we know there may come a time when we have to do something along the lines of what spain did or ireland or greece, cut back our social programs dramatically. we'll have to do what the rest of europe will do over time, which is accept a lower standard of living forever everybody which is why the longer-term plan is so vital, not the short-term craziness. because everybody knows he we can't keep providing americans with the current level of services unless we raise taxes in a big way on everyone and cut spending somehow. even the democrats are unwilling to consider that kind of tax cut. that's why long-term spending cuts are so important. they figure into the job creation of the next 25 to 30 years, and the ability of people to stay out of poverty longer term. in the meantime, you can't get the growth needed for government receipts to go higher even in
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the near term. put simply, if you got someone from honeywell or eaton or celgene in the rule, explain the impact. the imperative would be to get this fiscal cliff done before vacation. hey, listen, yes, no vacation without legislation. because the longer the delay the fewer reasons to start a business and the more reasons to shrink, lay off, build fewer houses, cars, or take your business offshore if you're big enough to do so. stick with kraimcrammer. crammer. . [ male announcer ] my client gloria has a lot going on in her life. wife, mother, marathoner. but one day it's just gonna be james and her. so as their financial advisor, i'm helping them look at their complete financial picture -- even the money they've invested elsewhere -- to create a plan that can help weather all kinds of markets.
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because that's how they're getting ready, for all the things they want to do. when the conversation turns to finding a financial advisor who's fully invested in you, turn to us. wells fargo advisors. together we'll go far. wells fargo advisors. is bigger than we think ... sometimelike the flu.fer from with aches, fever and chills- the flu's a really big deal. so why treat it like it's a little cold? there's something that works differently than over-the-counter remedies. prescription tamiflu attacks the flu virus at its source. so don't wait. call your doctor right away. tamiflu is prescription medicine for treating the flu in adults and children one year and older whose flu symptoms started within the last two days. before taking tamiflu tell your doctor if you're pregnant, nursing. have serious health conditions, or take other medicines. if you develop an allergic reaction, a severe rash, or signs of unusual behavior, stop taking tamiflu and call your doctor immediately. children and adolescents in particular may be at an
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increased risk of seizures, confusion or abnormal behavior. the most common side effects are mild to moderate nausea and vomiting. the flu comes on fast, so ask your doctor about tamiflu. prescription for flu.